The public in most Member States has a "reasonable" level of confidence in electronic payment transactions, according to the results of a study undertaken for the European Commission. The study was presented to a conference organised by the Commission in Brussels on 16th September that highlighted the increasing economic importance of such transactions and assessed the technological solutions which keep payment providers and users ahead of criminals and fraudsters. Finnish consumers show the highest level of confidence, followed by the Dutch and Swedish. Greek and Portuguese consumers have a particular lack of trust in electronic payments. The study also concluded that businesses using e-commerce need to improve the information they provide to consumers on security issues but that customers comparatively rarely suffer financially from fraud, which when it occurs is usually at the expense of the business involved.

Frits Bolkestein, Internal Market Commissioner, said: " E-commerce has massive potential to boost Europe's economy. Although big advances continue to be made concerning the security of electronic payments, that is not enough on its own. Consumers need to be convinced that electronic payments are "no hassle". All those involved - the payments industry, banks, e-commerce providers and users themselves need to be vigilant in order to maximise security. But we should not exaggerate the dangers either. The results of a study undertaken for the Commission show that paying electronically is becoming more and more accepted and secure. The Commission's forthcoming Communication on developing a single payments area in the EU will aim to build further on that."

There are over 207 million non-cash transactions every working day in the EU, an average of 138 transactions per year per inhabitant, according to figures for 2001. A significant proportion of these transactions is electronic. Increasing that proportion further would improve economic efficiency, but depends on breaking longstanding habits such as using cheques and boosting consumer confidence.

A wide range of payment technologies exists, and more are on the brink of being introduced in the market. However, payments over the Internet remain for now largely limited to 'classic credit card' payments, especially where cross-border payments are concerned. Some of the newer technically advanced solutions have not yet achieved significant market penetration.

Public confidence in electronic payment instruments

The study established a "confidence index" for each Member State, based on a number of indicators, most importantly interviews with 2,400 members of the public across the EU. The overall index was 7.08 from a maximum ten, indicating a reasonable level of trust in electronic payments instruments, although there still remain significant fears about security, fraud and threats to privacy. In general, consumers in the northern part of the Union, and in particular the Nordic countries and the Netherlands, had greater confidence in making payments electronically than those in the south, as the table below shows.

Country

Overall confidence indicator

% Variance from EU average

Finland

8.41

18.81

Netherlands

7.91

11.75

Sweden

7.79

10.05

Luxembourg

7.58

7.08

UK

7.50

5.95

Denmark

7.46

5.39

Germany

7.34

3.69

Belgium

7.12

0.58

France

6.96

- 1.68

Irland

6.91

- 2.38

Austria

6.66

- 5.91

Italy

6.62

- 6.48

Spain

6.46

- 8.74

Portugal

5.51

- 22.16

Greece

5.25

- 25.83

UE 15 = 7.08

Accessibility and clarity of security information

The study concluded, after analysing over 600 Internet sites, that many organisations taking part in e-commerce do not make security information sufficiently clear and accessible to consumers, though banks and financial institutions tended to do better in this respect.

Only 26 % of the e-commerce sites surveyed made security information easy to find within the site. 47 % of French sites did so, making them the best performers in this respect. Austrian sites came off worst with only 6 %. In some countries, on the other hand (Greece, Ireland, the Netherlands), 100 % of the e-banking sites surveyed provided easily accessible security information. The average for e-banking sites across the EU was 58 %, though only 14 % in Italy performed well.

As far as the clarity of the language used for security information is concerned, there are also wide divergences between countries and between e-commerce and e-banking sites. Across the EU, 83 % of e-banking sites analysed provided clear information with 100 % scores for Denmark, Greece, Spain, Ireland, Luxembourg, the Netherlands, Finland and Sweden. But only 55 % of e-commerce sites were clear with their security information with French (77 %), British (76%) and Spanish (71 %) sites scoring highest. In terms of clarity, e-commerce consumers in Sweden (15 % of sites clear), the Netherlands (16 %) and Luxembourg (17%) seem to be the least well-served.

Perhaps unsurprisingly given the above results, consumer organisations taking part in the study stressed that there are still many e-payments issues that remain unclear to consumers, in particular the liability, role and responsibilities of each party to an e-transaction if a security problem occurs. The study shows that although many customers perceive themselves as the likely victims should a transaction go wrong, in most cases, the damage is in reality borne principally by the trader or the payment system provider.

Asked which level of government should be the prime mover in reinforcing a secure framework for e-payments, nearly two-thirds of those who responded replied that the EU, rather than Member States acting alone, should take the lead.

The Commission will shortly be publishing a Communication with proposals for a new legal framework for payments in the Internal Market. A key aspect will be making sure citizens and businesses can make electronic payments simply and safely anywhere in the EU. The results of the study will be taken into account.